Ad Selling Strategies

Most of the business plans that we have read recently include a revenue stream from selling advertising space.

But just because you have a site that generates traffic and a targeted audience doesn’t necessarily mean that you’ll be generating a substantial amount of online ad revenue.

Let’s look at the latest online advertising trends:

1. Click-through rates for banner ads are declining. Translation: Sites need to offer other ways to advertise than just banners, and sites need to find ways to improve click-through rates.
2. In just three months this year, the number of sites accepting advertising grew 16 percent, from 1,815 sites in March to 2,111 sites in June. Translation: Competition is ramping up and getting smarter. There are more sites seeking advertising, which drives CPMs down.
3. The Wall Street Journal recently reported that 60 percent of companies that cut their online advertising budgets in 1998 cited an inability to measure ROI as the primary reason. Translation: Advertisers are demanding solid ROI numbers on their investment. To compete, sites will need to be able to measure impressions, clicks, and beyond, providing reports every step of the way.

Take a look at your business plan. Do you have what it takes to meet these demands? Do you have a solid plan for setting up your site to accept advertising? Do you know all of the different online ad models and how those should be priced? Do you have a sales team in place? Do you know how much it will cost to sell advertising? Do you have that kind of change laying around?

If not, here are ten steps to get started selling ads on your site:

1. Size Up the Competition. The first step should be to look at how your competitors position their advertising. Look beyond the homepage to the subpages. And also look beyond the banner ads to text links, custom sponsorships, and email opportunities. You might even want to look at sites that are not your direct competitors, but that offer interesting ad models.
2. Identify “Hot Spots” on Your Site. Put yourself in a potential advertiser’s shoes. What are the most attractive areas of your site? How much would you pay for those areas? What kind of targeting can you offer? A good way to gauge these “hot spots” is to look at your server log files and see which pages get the most impressions.

   Most media buyers will not buy advertising on a site unless you can guarantee X number of impressions for X dollars (surprisingly, many sites cannot).

3. Determine Your Creative Units. Research all of the possible ad sizes/types that your site can offer. According to AdKnowledge, the most common banner sizes (in terms of pixels wide x pixels high) are 468×60 (the most popular by far), 125×125 (large square), 234×60 (medium rectangle), 120×60 (smaller rectangle), and 88×31 (very small rectangle).

   Other units to consider are “static-only” ads. If you’re afraid that certain areas of your site might end up looking like the Las Vegas strip, a “static,” non-animated ad might be the best solution.

   Investigate the possibility of starting an opt-in newsletter. Email sponsorships are a hot commodity right now in the online advertising world.

   Rich media is also very hot these days. Rich media includes everything from pop-up windows to audio-enabled banners to banners that you can interact with (for example, I played a round of golf on a banner the other day).

   Bottom line: When it comes to creative units, be creative.

4. Determine pricing. Your pricing should be based on supply and demand. Some technology sites can demand up to $100 CPM for ads because they reach a prime target audience. On the other hand, sites that offer broad, untargeted audiences can be as low as $2 CPM.

   So there’s a big difference in how you should price your ads, depending on: 1) the space/industry you’re in, 2) your site brand awareness, and 3) the availability of your inventory.

   Consider offering CPC (cost per click) or cost for performance deals while the advertising model is ramping up. This is attractive to prospective advertisers because there is less risk involved for the advertiser. Also keep in mind that different types of ads (text ads, email ads, banner ads) all warrant very different pricing models.

5. Package Your Advertising. Media buyers like it when sites package their advertising into nice, neat bundles. It’s difficult to expect advertisers to understand and remember all of the areas of your site.

   If you put the different advertising elements into packages, it makes for a more compelling offer. One of my reps told me to think of it like a Chinese restaurant menu: If I like everything I see, I can order the Pu-Pu Platter; if I just want a couple of things, then I can order a la carte.

6. Allow Third-Party Ad Serving. It’s important that your site allow advertisers to use their own third-party ad serving. The most common ones are Doubleclick, AdKnowledge, and AdForce.

   The third-party ad server will walk you through the setup process. If you want the major advertisers, it is probably best to look into this now. It boggles my mind that some of the biggest sites on the web, such as AOL and Netscape, still do not accept any third-party ad serving.

7. Decide How to Handle Remnant or Unsold Inventory. I read a statistic somewhere that upwards of 75 percent of all ad space on the Web goes unsold. There are several ways to avoid losing ad revenues altogether.

   You might consider joining an ad network. These networks take a chunk of your ad inventory and sell it for you each month. It’s always a good idea to investigate a wide range of ad networks and compare what they can offer you in terms of revenue for your ad space.

   Word of caution: If your site traffic is low, you will probably get very little attention. These networks tend to sell the “known sites” first. Alternatives to the ad networks are the media auction sites, such as AdAuction.com or AdOutlet.com. These sites offer your inventory to the highest bidder — which is a great way to get at least something for your remnant ad space at the end of the month.

8. Take a Close Look at Your Tracking/Optimization Technology. Most large sites use some kind of ad rotating software to manage all of their advertisers. You’ll need a complete ad serving system that allows you to upload banners, schedule campaigns with start and end dates, and lets you offer your advertisers complete reports at the end of the month.

   One important feature that this kind of technology offers is the ability to optimize your campaigns. This service differentiates good sites from bad sites, and advertisers recognize the value of your efforts to improve the campaign.

   Ad serving technology also gives you the ability to run cost per impression or cost per click campaigns. It also allows you to run rich media ads and track their results. If you’re going to be serious about offering online advertising, this type of software is a must.

9. Organize Your Sales Force. You’ll need competent salespeople who understand your site and the competition.

   And you’ll also need a good online media kit that makes your opportunities very clear. Remember: Media buyers don’t have a lot of time to spend reading press releases, visitors’ comments, articles about your site, and so on. It’s crucial to post your rates and contact information clearly and prominently.

   And don’t forget the offline sales materials. This includes everything from media kits to T-shirts and bumper stickers that your salespeople will leave behind.

10. Listen to Your Prospective Advertisers. What types of ads are they looking for? What areas of your site are the most interesting? What might improve purchasing experience? This is your best source of input for maximizing your ad sales revenues.

These recommendations will help you develop the basic strategies for ad selling. Keep in mind that it takes human resources and an investment in technology to sell advertising space successfully.